economics medium True/False

Small Finance Banks (SFBs) in India are restricted from lending to large corporations and must ensure that at least 75% of their Adjusted Net Bank Credit (ANBC) is directed towards priority sector lending.

  1. True
  2. False

Answer: True

SFBs were conceptualized specifically to further financial inclusion by supplying credit to small business units, small and marginal farmers, micro and small industries, and unorganized sector entities. To ensure they stay true to this mandate, the RBI imposes a stringent 75% Priority Sector Lending target, which is significantly higher than the 40% mandated for universal commercial banks.

Topic Banking - Payments
Exam Relevance Banking, UPSC Prelims, SSC
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